WASHINGTON (Legal Newsline) - The U.S. Supreme Court justices heard arguments on Tuesday over the ability of state attorneys general to file discrminatory lending lawsuits against national banks.

New York Attorney General Andrew Cuomo is asking the Court to give him permission to investigate and sue national banks, continuing a case first filed by his predecessor Eliot Spitzer. Only the Office of Controller of Currency may do so now.

Justice Stephen Breyer said allowing state attorneys general the ability could make it difficult for national banks to regulate themselves.

"I imagine that banks, particularly right in these last few months, are in situations where there are three categories of borrowers. One might be a category of people whom you are reasonably confident in, and the second is a category of people who are borderline or less so, and there are also minorities," Breyer said.

"Now, where you make the decision as a bank to deny them the loan, it sometimes is difficult to say whether that decision was made for a discriminatory reason, namely race, or for a legitimate reason, namely because this was a person unlikely to pay the money back.

"Now, how is a bank to function if 50 different attorneys general plus all the federal agencies all look at the books of the bank to look at the individual loan and to make that kind of determination about which quite honestly reasonable people will often differ?"

New York Solicitor General Barbara Underwood replied, "There has been no such multiplicity of enforcement. In fact, there is so much antidiscrimination work to go around that having multiple enforcers is a device for..."

Breyer interrupted, "OK. So you deny the hypothetical. You are saying that my analysis of the problem is wrong. There simply is no such problem, and since there is no such problem, it doesn't matter if everyone enforces it."

State attorneys general have also asked President Barack Obama to give them the power.

Each lower court sided against the state attorneys general.

A transcript of the proceeding can be viewed here.

From Legal Newsline: Reach John O'Brien by e-mail at

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